Bank capital is an economic term that refers to the difference between a bank's assets and its liabilities. Capital consists of all of the money that a bank has in its possession. There are many different components of capital, but the most important component is the bank's shareholders' equity. The shareholders' equity and all other components of capital are used to determine whether a bank is solvent or insolvent.A bank's capital also plays a significant role in determining whether or not a bank is considered "well capitalized." This is a term that refers to the amount of capital that a bank is required to hold, based on its total assets. There are rules and regulations that determine how much capital is required for each bank.Some banks have more assets than others, so there are different regulations for each bank. If a bank has less than the required amount of capital, it will be considered undercapitalized. If it has more than the required amount, it will be considered well capitalized.The amount of capital that a bank has is an important factor in determining the strength of the bank and its ability to meet the needs.
